Abstract
We investigate the effect of investors' pro-sustainable beliefs – the beliefs about other investors' pro-sustainable preferences – on sustainable investing. Using an incentive-compatible coordination game that incorporates important aspects of a stock market, we elicit investors' pro-sustainable beliefs. We find that, first, investors with pro-sustainable beliefs invest in sustainable assets, even when controlling for investors' pro-sustainable preferences. Second, investors with pro-sustainable preferences invest more in assets with positive sustainability performance than in assets with negative sustainability performance, a result we do not obtain for investors with pro-sustainable beliefs. This finding underscores the complementary relation and importance of pro-sustainable preferences and beliefs for sustainable investing.
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